The Creation of the Second Great Depression

The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences... are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!

Paul is right... it's not a crash that creates an extended Depression; it is how we respond to it. And doubling-down on a debt-based system (merely moving around who holds and who is in charge of the debt) cannot be the answer.

Also see this Michael Hudson interview which is of a similar gist: no "bailout" of Wall Street is needed. In fact it is precisely in the vein of what we have been doing for the past 30 years, and therefore is exactly the opposite of what should be done.

One caveat regarding Hudson: he recommends T-bills as the "only" safe haven for us little guys to protect our wealth. But he ignores gold and silver. The reason is that Hudson still supports an "economist-managed" system; that is to say a centrally-managed economy. His quibble is simply who the managers are.

A sound money system is the only one that truly protects the wealth of the people. Even better, such a system without government props for banks is the most optimal. You don't have to wait for such a system to arrive -- you can get the wealth-preservation benefits by buying gold or silver right now. All paper is suspect.